Sim: Demand to determine property prices more than GST

KUCHING: Public demand will determine property prices more than the Goods and Services Tax (GST), which is due for implementation a year from now.

“The market sentiment now is quite mixed. It is in transition,” said Sarawak Housing and Real Estate Developers Association (Sheda) secretary-general Sim Kian Chiok. “As such, demand will continue to play a greater role in determining prices.”

GST will be introduced next April at 6%. All property transactions except residential will be included in the new tax.

“Commercial properties should
go up in price (after GST), but some say the market is ‘overheating’, so future prices might not necessarily move in the direction of GST. Prices still come down to location and demand.”

Sim said even with more expensive construction costs, price appreciation rates “might stay even” if demand dropped due to the GST’s impact on purchasing power.

He declined to comment on whether Sheda was expecting a rise or drop in property supply in the coming years, given newly imposed state regulations and higher building costs.

“Our supply in Sarawak is generally quite consistent over the years. Annual about 12,000 new stock is added. There is always also tie over (old stock) from previous years.”

He added that the number of new affordable housing that would come on the market would depend on the Government’s policies and the availability of land the new basic infrastructure.

On a related matter, he reiterated that property developers did not make 80% to 100% profit, as alleged by Housing Minister Datuk Amar Abang Johari Tun Openg recently.

In a statement, Sheda said profits by public listed companies, which are the largest developers, did not show such margins.

“The big developers set trends for the entire industry. Definitely margins are not as alleged. People can refer to public listed companies’ accounts to see whether such exorbitant profits are made or not.”

Johari caused a stir last month when he was quoted as saying certain developers made as much as 100% profits from property sales. Johari claimed irresponsible developers were inflating prices.

Sim was speaking to reporters promoting the upcoming Sheda Home and Property Roadshow, which will kick off April 18 at Boulevard Shopping Mall here.

The event, organised by Absolute Cool Event, will include over 60 exhibitors, spread out over the new and old wings of the mall.